Cephalon bids $203 million in bid to acquire Arana

The USA’s Cephalon has made a big offer to acquire Australia’s Arana Therapeutics which specialises in antibody-based drugs for inflammatory diseases and cancer.

Under the terms of the bid, Cephalon will offer A$1.40 cash per share, or $318 million in total (about $202.7 million), which represents a whopping premium of 70% on Arana’s 90-day average price and 69% on its closing price for February 25. Cephalon has already acquired a 19.9% stake in Arana from the company's two largest shareholders, Start-up Australia Ventures and Rockwell Securities.

The offer has the support of Arana’s independent directors and if Cephalon obtains a 90% of the Sydney-headquartered firm’s stock, it will increase its offer price by A$0.05 per share. The deal will be funded using the Pennsylvania-based firm’s cash reserves.

Its chief financial officer, Kevin Buchi, said that Cephalon is offering Arana shareholders “the opportunity to de-risk their investment portfolios by taking cash for their shares at a time when cash provides certainty and stability". He added that “we are better equipped to take Arana's lead compound, ART621, through clinical development and, pending the success of clinical trials, to international markets”.

ART621, is a new generation tumour necrosis factor alpha blocker which is currently in Phase II trials for psoriasis and rheumatoid arthritis. Cephalon added that Arana has a strong patent portfolio related to anti-TNF alpha antibodies and receives royalties from Abbott Laboratories and Johnson & Johnson, the makers of Humira (adalimumab) and Remicade (infliximab) respectively.

Cephalon concluded by noting that the aforementioned royalties should largely offset costs of development in the near term. Arana’s chairman, Robin Beaumont, said the bid is "an attractive cash offer' and provides the firm's shareholders with "liquidity, certainty and a substantial premium to the current share price". He recommends the offer, "in the absence of a superior proposal.”